Question

The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm.

1. Purchased $80,000 of materials on account.

2. Issued $4,000 of supplies from the materials inventory.

3. Purchased $56,000 of materials on account.

4. Paid for the materials purchased in transaction (1) using cash.

5. Issued $68,000 in direct materials to the production department.

6. Incurred direct labor costs of $100,000, which were credited to Wages Payable.

7. Paid $106,000 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.

8. Applied overhead on the basis of 125 percent of $100,000 direct labor costs.

9. Recognized depreciation on manufacturing property, plant, and equipment of $50,000.

The following balances appeared in the accounts of Steve’s Cabinets for April.

	Beginning			Ending
Materials Inventory	$	148,200			?
Work-in-Process Inventory		33,000			?
Finished Goods Inventory		166,000		$	143,200
Cost of Goods Sold					263,400

Required:

a. Prepare journal entries to record the transactions.

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Answer 1

TR	General Journal				Debit	Credit
1)	Raw materials inventory				80,000
	Accounts payable					80,000
2)	manufacturing overhead				4,000
	Raw materials inventory					4,000
3)	Raw materials inventory				56,000
	Accounts payable					56,000
4)	Accounts payable				80,000
	cash					80,000
5)	work in process inventory				68,000
	Raw materials inventory					68,000
6)	work in process inventory				100,000
	Wages payable					100,000
7)	Manufacturing overhead				106,000
	Cash					106,000
8)	work in process inventory				125000
	manufacturing overhead					125000
9)	manufacturing overhead				50,000
	Accumulated depreciation					50,000

Materials inventory					Work in process inventory
Beg bal	148,200				Beg.Bal	33,000
1	80,000	4,000	2		5)	68,000	240,600	Finished goods
3	56,000	68,000	5		6)	100,000
					8)	125,000
End bak	212,200
					end bal	85,400
Manufacturing overhead control					Applied manufacturing overhead
Beg bal	0				Beg bal	0
2)	4,000						125,000	8)
7)	106,000
9)	50,000
End bal	160000				end bal		125,000
Accounts payable					Cash
Beg bal	0				beg bal	0
4)	80,000	80,000	1)				80,000	4)
		56,000	3)				106,000	7)
End bal		56,000			End bal		186,000
Wages payable					Accumulated dep=-PP&E
Beg bal	0				Beg bal	0
		100,000	6)				50,000	9)
End bal		100,000			End bal		50,000
Finished goods inventory					Cost of goods sold
Beg bal	166,000				beg bal	0
WIP	240,600	263,400			finished go	263,400
End bal	143,200				End bal	263,400